Transcript of a Press Briefing by William Murray, Deputy Spokesman, External Relations Department, International Monetary Fund

MR. MURRAY: Good day. I'm William Murray, Deputy Spokesman for the IMF and this is one of our regular briefings. Let me remind you that it's embargoed until 10:30 a.m. Washington time and that's 1430 GMT. I also want to apologize to our Spanish-speaking listeners. We have a technical problem this morning in terms of our Spanish-language feed, so my apologies on that.

Let me go through a couple of items and then I'll take questions from journalists here at IMF headquarters and then from you watching via the IMF Press Center. I'll start with Managing Director Christine Lagarde. She will be in Frankfurt on March 19 to give a keynote speech at the Frankfurt Finance Summit on the topic of financial sector regulation. We'll be in touch regarding advanced embargoed access to that speech. I don't have information on that at the moment, but we will be in touch with you. While she is in Frankfurt she will also visit the ECB and the Bundesbank for private meetings. Deputy Managing Director Min Zhu tomorrow will be a panelist in an event organized by the Center for Global Development here in Washington, D.C. Then on March 19 he will be at Brown University in Providence, Rhode Island, and will deliver a speech on the role of China in a changing world. Finally, he will be in Beijing from March 23 through 25 to attend the China Development Forum. As part of his participation in the forum he'll give a luncheon speech and that speech will be on March 24. Again we will be in touch with you regarding any advanced access to his prepared remarks.

On other events, tomorrow, March 15, we will publish our first-ever overall assessment of the soundness and stability of the European Union's financial sector. Back on December 20 we published a concluding mission statement on our EU financial sector assessment. What you will receive tomorrow under embargo via the Press Center will be a host of documents associated with our analysis of the financial sector in the European Union. Again this is not a banking or financial institution-specific analysis. It looks at the system, the structures, the regulatory structures, the systems in place for maintaining financial stability. As a last point on this, the Executive Board discussed the staff findings last Friday, March 8, so there will be some indication of the Board discussion. Lastly, before I take your questions, on March 20 through 21, and you may have seen this on our website already, the IMF and Oxford University will hold a conference here at headquarters on understanding international commodity price fluctuations. First Deputy Managing Director David Lipton will open the conference with some brief remarks and then there will be a number of panel discussions. There is an agenda that shows you the various panels. That's open to the press and to the public. Advanced registration is required. Go to the website if you want to attend that conference and register there.

With that let me take your questions.

QUESTIONER: What is the status of the talks on the Greek program, if you could tell us?

MR. MURRAY: As you know there are already statements out of Europe that the mission will begin again, we expect it in a few weeks, that significant progress has been made in the mission discussions that were underway for the last two weeks. There are a few technical issues that remain outstanding and additional technical work will be necessary to settle these issues. There was a short break by the mission to allow this technical work to be completed, and my understanding is that the mission intends to return to Athens in early April to continue its work.

QUESTIONER: So there is another talk? There is no collapse of the talks? In August 2011 they stopped talks for a few days and they went back in December...

MR. MURRAY: I don't have anything. I think that's your characterization, Michael and I wouldn't buy into it. As I said, significant progress has been made and they're going to take up again in early April.

QUESTIONER: What are the unresolved issues? What are the issues that remain outstanding?

MR. MURRAY: Thanks for asking that. It's an understandable question to be asking at this juncture. We're not getting into the details. Significant progress has been made and once these technical issues are resolved a mission will be back on the ground.

QUESTIONER: On 2010 the IMF quota and governance reform, do you have a comment on the U.S. Obama Administration's recent request for Congress to approve this reform?

MR. MURRAY: The administration's request to approve it?

QUESTIONER: Yes.

MR. MURRAY: What you're asking me is that there has not been a formal request to approve it. Is that what you're asking or what's your question?

QUESTIONER: In general, do you have a comment on this effort and some objections from GOP lawmakers on this effort?

MR. MURRAY: The U.S. authorities have told us that they intend to secure approval of the 2010 reforms and we welcome that. As far as the process that's evolving on Capitol Hill between the administration and Capitol Hill, I can't get into that. I've been referring journalists to the Treasury for insights there. To repeat for the audience's sake, these 2010 reforms are very important. They create an all elected Executive Board. They shift dynamic merging market and developing countries into the top 10 of our share holdings, which we call quota. And it will feed into the evolution of the IMF in its governance structure. It was approved by the membership in 2010, as you noted, and now it has to be ratified and we hope for progress there.

QUESTIONER: Don't you feel that political gridlock here on fiscal issues could slow down the process, because even the Democrats… to put the request to the Congress about the quota reforms?

MR. MURRAY: I don't have any kind of political analysis for you on that. I'm pretty sure the Obama Administration and Treasury would be much better placed to explain the dynamics here in Washington than I would.

QUESTIONER: To continue the discussion, I remember before the sequester the tone of the predictions was very dire both from the Treasury and from the IMF. Basically people were talking about the possibility of a second dip or of a second recession. Then the sequestration happened and the tone changed. Now it's 0.5 percent slowdown in growth, maybe, in terms of dealing with deficits. What's happened? The facts have not changed. The assessments have changed markedly. How do you explain that?

MR. MURRAY: People's assessments are all over the place, Andrei. You'll have a better idea of our general views on developments in the global economy and the U.S. economy in mid-April when we come out with our latest World Economic Outlook. In January our forecast was fairly straightforward. The U.S. economy was projected to grow at 2 percent. The sequestration was not factored into that forecast and the forecast will be adjusted in mid-April. There have been certainly improvements, financial markets have rallied recently and financial conditions appear to have improved. This seems to be the result of analysis of near-term risks. There are still issues lingering out there, financial issues and others that we will be exploring in greater detail next month through the Global Financial Stability Report and through the WEO. Beyond that, I really don't want to get into characterizing current tones.

QUESTIONER: Another subject if I may is the Pope. The poor of Latin America have lost a defender in Hugo Chávez. They have gained a potential stronger one in the new Pope Francis. Does the IMF have a relationship with the Vatican? How do you view the election in general? What can you say about the new Pope?

MR. MURRAY: We congratulate the new Pope and Catholics around the world, but we don't have a formal relation. The Vatican is not a member of the IMF. Also, I'd like to extend condolences to the Chávez family. But beyond that I don't really have anything to offer.

QUESTIONER: The Ukrainians have announced that they expect a new mission from the IMF. Are there any insights on that?

MR. MURRAY: Yesterday, for all of you who may not be aware, our Resident Representative in Kiev issued a statement on Ukraine and let me repeat it for those who are not familiar: The mission plans to visit Kiev from March 27 through April 10. The point of this mission is to continue negotiations with the Ukrainian authorities on a new Stand-By agreement. That's where it stands. That's all I have right now.

QUESTIONER: Do you know the amount of the…

MR. MURRAY: That's obviously to be discussed. I don't have guidance on that. Let me get to a couple of questions here on the Media Briefing Center and then I'll get back to you. Let me read it out THE QUESTION: "In Tunisia, what is the status of IMF programs in light of unrest, including reduction in subsidies and rising prices, and now a short-term government?" Negotiations for a precautionary Stand-By Arrangement are ongoing at a technical level with the Tunisian authorities. As you noted, a new government has been formed and staff is now inquiring about its intentions and mandate. In any case, the IMF continues to stand ready to help Tunisia in any way deemed necessary during this difficult political transition process.

I'm going to take one more question from the Media Briefing Center: we had one question also from the Ukrainian News Agency, so I think we've taken care of that one. I have a question here from Portugal: "What kind of difficulties did the Troika encounter in Portugal? Has any conclusion been reached about the €4 billion cuts in government spending?" I don't think I have any specific guidance on that to offer, but let me give you a sense of where things stand in Portugal at the moment. In Portugal we are closely engaged obviously with the authorities and the finance minister is expected to present the results of the seventh program review tomorrow. We expect a joint IMF, European Commission and European Central Bank statement to be released right after the minister's press conference. Beyond that, I don't have any further comment on Portugal.

QUESTIONER: I would like to have a sense of how the IMF is monitoring the development of the lack of government in Italy and if there is any concern about the stability, not only in Italy but the effect that a spillover could have on European countries in the crisis.

MR. MURRAY: The Managing Director has been asked this recently. I think we've had ongoing queries as you're aware about the political process in Italy and we're not going to comment about that. Let me reiterate what we have been saying: that Italy has made some important gains in recent years on reforms and fiscal consolidation and for us it's important that those reforms and those gains from reforms and fiscal consolidation be maintained. There is one thing I do want to point out because it may be of interest to you and you may not be aware. There is currently a financial sector assessment underway for Italy. It's a normal process. Remember that Italy is part of the 25 systemically important financial sectors. In January the mission first visited and looked into the effectiveness of financial sector supervision and compliance with international supervisory standards. The mission has now landed and I expect it will be on the ground for about two weeks visiting Milan and Rome and will look at financial sector risks and resilience, bank resolution regimes and crisis management arrangements. This is all part of the normal process and procedures underway for a financial sector assessment. Again, they landed this week and they'll be there for about two weeks.

QUESTIONER: Could you give us an update on Cyprus a little bit beyond that the talks are continuing? We're hearing new numbers for the bailout, a reduced amount that would be needed. We hear that the IMF may not necessarily continue being or want to be part of the package. Could you address some of these? Also, I was curious about Egypt. You have by now received the plan from the authorities. Do you have an opinion about it? Is there a planned visit and when?

MR. MURRAY: Let me deal with Cyprus first. The Managing Director as you probably know is going to participate in a Eurogroup meeting tomorrow that will discuss Cyprus. Given that this meeting is tomorrow, I don't feel comfortable getting into any real nuances of the situation. I'm not going to speculate about the outcome of the meeting. I have to repeat this as it's important that you know this. The common goal continues to be to develop a durable solution in Cyprus's banking sector problems at low cost to the taxpayer that is consistent with debt sustainability. Additionally on Egypt, I'm not sure if you've heard this, but Masood Ahmed will be visiting Cairo this weekend. There will be continuing discussions with the Egyptian authorities. The idea is to discuss with the authorities their economic program and the next steps in the IMF's engagement with the country. Again I have to underscore that the IMF remains fully committed to supporting Egypt at this critical time through a homegrown program that addresses the country's economic and financial challenges and lays the foundation for a durable and socially inclusive recovery of the economy.

QUESTIONER: May I follow-up on both? First, on Cyprus. You used to have for Greece a pretty precise idea of what sustainability for the debt was and it was 120 percent of GDP by 2020. Why don't we have the same for Cyprus? On Egypt and Masood Ahmed's visit, is it the equivalent of a negotiating visit or is it just sort of a courtesy visit?

MR. MURRAY: I'll take Egypt first. There's an ongoing discussion with the authorities and I don't want to characterize what form it takes. We've had ongoing contacts with the Egyptian authorities and we've remained fully engaged with them. On Cyprus, it's a little early to be getting into sensitive analysis that's underway. I couldn't elaborate at this juncture, Sandrine, on what our views are on specific debt levels, but they need a solution on debt sustainability. There is no question about that.

QUESTIONER: Two questions. Has the IMF officially presented the Egyptians with a proposal on the credit facility, the financing facility? Is there something that the Egyptians have expressed interest in? Number two, on IMF quotas, will the delays in the U.S. legislation which now are probably mostly in October, affect the discussions on the quotas and the quota formula coming up, which you guys had wanted something early next year? Does that in any way affect it?

MR. MURRAY: Let me get to Egypt first. We continue to have productive discussions on how the IMF can best support Egypt in meeting its economic and financial challenges. On the quota situation, I think you should be speaking to the U.S. Treasury about that. That's the process underway in Washington. It's a complex issue obviously, but I can't offer you any keen insights on how it's going to play out. Let me repeat that we welcome that the administration is working to secure approval of the 2010 reforms. Let me go to the Media Briefing Center and then I'll come back to the room. We have the following question: "Should euro zone countries take more time in consolidation programs in order to avoid to damp too much economic growth?" You've heard this before and I'm going to repeat it. We think that Europe has made significant gains in recent years in terms of fiscal policy. By and large countries that have to focus on market access may have different demands on them than others, but generally speaking with growth and employment, getting the pace of consolidation right is of the essence. As I mentioned, countries where market constraints are material need to sustain consolidation efforts. But the adjustment elsewhere should be conducted at an underlying pace that balances the need to bring down deficits and support the economy. It's important to focus fiscal targets on structural rather than nominal deficits.

QUESTIONER: Could you comment on the fact that France has acknowledged that it was not going to reach its deficit targets this year? And on Venezuela, do you hope that following the death of Hugo Chávez the IMF could improve its relations with the country?

MR. MURRAY: I'm going to have to have somebody get back to you on France. I don't have any guidance on that. On relations with Venezuela, I have nothing specific to offer, but I want to remind you that Venezuela has an Executive Director on our Executive Board so we have very active engagement with Venezuela through the mechanism of our Board. QUESTIONER: Are you happy with the relation you have with…

MR. MURRAY: I'm not going to characterize whether we're happy or sad. I'm saying that we have active relations with Venezuela. We hope to have good relations with all of our member countries.

QUESTIONER: (inaudible)

MR. MURRAY: He's an Executive Director from Venezuela, yes.

QUESTIONER: About Europe, can you clarify what you said before about significant gains in fiscal policy in recent years but the pace of consolidation has lessened? Could you articulate about that? Just a little follow-up. As you said about the U.S. that you were going to adjust the forecast following the sequestration, do you expect an adjustment forecast for Italy and Europe too?

MR. MURRAY: I mentioned this earlier. I don't want to get into how we're going to adjust the WEO forecast. We've said, and this is a public record, that the sequestration if fully implemented over the seven-month period would trim a half a percentage point off GDP, but that's again full implementation. There are a lot of nuances there. Let's wait and see what numbers we crunch in April. Do you want me to elaborate on the pace of consolidation? I don't have much. Fiscal policy is intricate in any country as we all know and the pace of fiscal adjustment is going to be on a country-by-country basis. In general terms, there are countries that have made gains in fiscal consolidation in recent years and have the ability to adjust the pace of that consolidation in the period ahead in the near-term.

QUESTIONER: I'd like to go back to Cyprus for a second. There is of course an ongoing friction between the IMF and the government of Cyprus. I quote from reports: "The Cypriots do not want the participation of the IMF." The main question is this: Are you going to participate in this Cyprus…?

MR. MURRAY: The Managing Director is going to the Eurogroup meeting tomorrow on Cyprus. We are actively engaged on the issue, but I don't have anything more to offer than that.

QUESTIONER: I have a question on Pakistan. The Asia Development Bank has said that Pakistan has reached a critical balance of payments situation. Are there any talks with the IMF on some sort of interim facility with the Pakistanis until they reach the election, similar to what is possibly going on with Egypt or any further comment on Pakistan?

MR. MURRAY: To remind you, we have a Resident Representative in Pakistan with active engagement on a day-to-day basis there. What I can tell you is that the Fund is engaged with Pakistan but there has not been a formal request from Pakistan for new financing from the IMF. We had a mission recently in Islamabad, but there has not been a formal request.

QUESTIONER: Back to Greece. I would like to ask you whether the IMF agrees with the so-called mobility scheme for the public sector that was introduced by the Ministry of Administrative Reform.

MR. MURRAY: It's in the program documents, the mobility scheme. That's something that's still under discussion obviously, so that getting into the nitty-gritty of the outcomes, I can't at this stage. I don't have anything to offer you on that.

QUESTIONER: To follow-up on 2010 quota and governance reform, does the U.S. Treasury give a timetable of how things are going on in the U.S. Congress? And is the IMF management, IMF leadership, personally engaged in efforts lobbying U.S. lawmakers to approve this as soon as possible?

MR. MURRAY: On that you really should talk to the Treasury about timetables, timelines, process and strategy. I can't get into that. In terms of IMF engagement, we are fully engaged not only with the U.S. but with all of our membership in terms of promoting these governance reforms. We've been very public about the need to implement these as quickly as possible, the sooner the better. Of course, on the reform of the Executive Board, the Board currently is seated every two years so that even if the reform took effect today, it would be essentially two years from now. Beyond that we are very actively engaged. We've had active discussions with all political parties and players in Washington as well. Beyond that I don't want to add much.

QUESTIONER: You said Masood Ahmed will go to Cairo. Can you give us the dates?

MR. MURRAY: This Sunday is when Masood is expected to be in Cairo.

QUESTIONER: I have to come back to you on the IMF quota because I wasn't asking earlier about what the Treasury was doing. I was asking whether it was going to delay IMF discussions on the formula and the next process.

MR. MURRAY: I apologize if I misunderstood that. We have a process here that we control. We're in control of our own process. As you know, we completed the 14th General Quota Review and we completed the formula review in January, as we expected. Now there will be a subsequent quota formula review that will kick into gear. June is when the next data set is available. We use our purchase parity data and this data is important so that all of our member countries can see when we kick numbers into our various formula permutations or formulas under discussion or negotiation, they can see what the end results are. It's a political process in terms of the quotas obviously and decisions have to be made in national capitals in the end, but we facilitate that discussion by providing the data and providing the analysis on the formula.

QUESTIONER: Does this in any way affect the resources that the Fund needs?

MR. MURRAY: Not per se. We have resources in place, but this is not all about resources. This is about governance reform. That's all I have to offer.

If you want to submit questions, please do that soon because I'm going to wrap this up momentarily. We've got a question from Spain. It asks "Are the consolidation and fiscal efforts of Spain enough? Do you think that the European Commission should give Spain more time to achieve the objectives?" We believe that Spain has taken strong and wide-ranging reform measures to face its economic challenges. However, the recession is deepening, unemployment is very high and financial conditions remain fragile. Restoring growth will require a significantly more gradual path for fiscal consolidation along with the implementation of structural reforms that can generate jobs and boost confidence.

With that, I'm going to wrap up. Let me remind you that press registration for the Spring Meetings is open. I hope everybody is registering both here and online. At our next briefing in 2 weeks we'll start getting into some of the details of the Spring Meetings and things of that nature. Thanks for joining us today. Have a good day.